Congress recently passed the most sweeping bankruptcy legislation in more than twenty five years. The Bankruptcy Abuse prevention and Consumer Protection Act was written to make it harder for most personal bankruptcy filers to have their debt swept away through a Chapter 7 filing. The new law will require that potential bankruptcy filers pass a “means test” and most will not qualify for the Chapter 7 filing.
Instead, they will have to file under Chapter 13, which requires a court-defined repayment schedule of up to five years. This legislation, considered by its detractors to be a “wet, sloppy kiss” to the credit card companies, has many people justifiably concerned about how to approach their problem debt. Once concern that has largely not been addressed is the fact that it may be considerably more difficult to hire a bankruptcy attorney once the new legislation takes effect in October 2005.
The existing bankruptcy law makes a personal filing a fairly simple and routine procedure. Most personal filers file under Chapter 7. The court eliminates their obligation to repay their debt, and the debtor is allowed to make a fresh start.
This does not come without cost; the bankruptcy filing will stay on the debtor's credit report for a period of ten years. Legal costs for hiring an attorney for a Chapter 7 filing will vary from state to state, but the process typically involves just a few hours of billing time.
The new law, which will require most bankruptcy filers to apply under Chapter 13, is different. Not only is the filing procedure more complicated, resulting in two to three times the legal fees, but the new legislation holds attorneys liable if incorrect financial information is filed on the part of a client. This leaves lawyers vulnerable to lawsuits from their clients as well as the bankruptcy trustees involved in the case.
For the average consumer, this means that it will become both more difficult and more expensive to find a competent attorney to handle their bankruptcy case. Many attorneys who handle bankruptcy cases on a part-time basis, including those in small towns who handle a variety of cases, may simply decide not to handle bankruptcy anymore. For them, the risk of a lawsuit may mean that it simply isn't worth their while to handle such cases.
Attorneys who specialize in bankruptcy law will undoubtedly raise their rates, partly because of the increased demand caused by fewer lawyers doing such work, and partly because of the increased liability.
Anyone who has problem debt now and is considering filing for bankruptcy should probably do so as soon as possible. It would be far better to hire an attorney now, when you might not need one, then to try to hire one later, when one may not be available. It is better to be safe than sorry.
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The Only Ekg Book You Ll Ever Need
Although lowering your monthly mortgage payment is always attractive, don't let a slightly lower mortgage rate fool you. If you're not careful when thinking about a mortgage refinance, you could cost yourself more in expenses than what you save in monthly payments -- and not even know it. (Even with so-called "no cost" mortgage loans.) Refinancing a home loan has more to it than appears on the surface. Be sure to consult with a mortgage professional before getting yourself into something you can't reverse.
Mistake #1: Waiting for lower interest rates.
Mortgage rates are notoriously unpredictable. No one can speculate on mortgage rates with enough accuracy to win every time. If rates are attractive, consider refinancing. If you do it right, and rates go down again later, you can always refinance again. If trates go down substantially before you finalize the loan, you can always change mortgage brokers. If rates go up, you'll be glad you locked that initial rate in!
Mistake #2: Not shopping around enough with local mortgage bankers/brokers.
E-loan, Lending Tree, and other online mortgage shopping sites are great, but be careful! They are national mortgage shopping sites. That might sound nice because you get mortgage lenders from across the nation competing for your business, but be careful - any lender other than a mortgage lender who is familiar with lending in your home-state will not be familiar with local practices, and that could cost you in many ways. It might not only cost you that lower interest rate, but depending on your other circumstances, it could actually cause you miss that window of opportunity.
Mistake #3: Not looking at the whole picture.
If you have been paying your mortgage for several years, the amount saved every month by refinancing might not save as much as you think. In fact, it usually costs far more than people think! In other words, if you are 10 years into your mortgage loan, refinancing your mortgage would make you start over on the repayment of that debt. Obviously, it might be great to save some money after refinancing your home loan, but once you refinance the loan you've been paying on for 10 years, you'll be paying off that loan for an additional 10 years! That could really hurt. Sure, it may seem great that you're lowering your $1200 monthly payment by $100, but when you factor in the extra 120 payments of $1100 that you'll have after refinancing, you'll find that your "$100 monthly savings" will actually cost an extra $108,000 over the life of the loan! ($1100 times 360 payments over 30 years is $108,000 more than $1200 times 240 months.)
Be sure to get a "good faith estimate" and "Truth in Lending statement" from your mortgage broker before jumping into a new loan that could cost thousands of dollars (if not hundreds of thousands) over the life of your new loan. Get your mortgage broker to explain not only what your monthly payment will be, but also what your new loan balance will be compared to your old loan, what the new interest rate is, and how many years you will be adding to your repayment schedule if you do refinance.
Both Talbert Williams & Joel Mcdonald are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Joel Mcdonald has sinced written about articles on various topics from Wedding Planning, Sell Home and Finances. If you're thinking of buying , be sure to visit our award-winning. Joel Mcdonald's top article generates over 8100 views. to your Favourites.
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